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Concentrations

6 Months Ended

Nov. 30, 2023

Note 14 – Concentrations

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of trade accounts receivable and cash deposits, investments and cash equivalents instruments. The Company maintains its cash in bank deposits accounts. The Company’s account at this institution is insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. At November 30, 2023 and May 31, 2023, the Company held cash of approximately $5,161,624 and $4,582,682, respectively, in excess of federally insured limits. The Company has not experienced any losses in such accounts through November 30, 2023.

Concentration of Revenue, Accounts Receivable, Product Line, and Supplier – Hair and Skin Care Products

During the three months ended November 30, 2023 hair and skin care product sales to one customer, which represented over 10% of our total sales, totaled 13%. During the three months ended November 30, 2022, there were sales to two customers, which represented over 10% of our total sales, totaled 65% and 31%. During the six months ended November 30, 2023 hair and skin care product sales to two customers, which each represented over 10% of our total sales, aggregated to approximately 24% of the Company’s net sales at 13% and 11%. During the six months ended November 30, 2022, hair and skin care product sales to two customers, which represented over 10% of our total sales, totaled 68% and 28%.

During the three months ended November 30, 2023 hair and skin care product sales to customers outside the United States represented approximately 32% to Canada. During the three months ended November 30, 2022, sales to customers outside the United States represented approximately 16% from Canada. During the six months ended November 30, 2023 hair and skin care product sales to customers outside the United States represented approximately 31% to Canada. During the six months ended November 30, 2022, sales to customers outside the United States represented approximately 23%, which consisted of 19% from Canada and 4% from Italy.

During the three months ended November 30, 2023, hair and skin care product sales by product line which each represented over 10% of sales consisted of approximately 18% from sales of hair shampoo, and 13% from sales of hair conditioner, 11% from shampoo and conditioner bundles, 35% from bundle kits and 23% from hair treatment product. During the three months ended November 30, 2022, hair and skin care product sales by product line which each represented over 10% of sales consisted of approximately 10% from sales of hair shampoo, 13% from conditioner, and 61% from sale of bundle kits (shampoo, conditioner and spray). During the six months ended November 30, 2023, hair and skin care product sales by product line which each represented over 10% of sales consisted of approximately 17% from sales of hair shampoo, 22% from sales of hair conditioner, 32% from bundle kits and 20% from hair treatment product. During the six months ended November 30, 2022, hair and skin care product sales by product line which each represented over 10% of sales consisted of approximately 13% from sales of hair shampoo, 17% from sales of conditioner, and 54% from sale of bundle kits (shampoo, conditioner and spray).

During the six months ended November 30, sales by product line comprised of the following:

Schedule of sales by product line
	For the Six Months ended
	November 30,
Hair Care Products	2023			2022
Shampoos		17	%		13	%
Shampoos and Conditioners		9	%		7	%
Conditioner		22	%		17	%
Bundle Kits		32	%		54	%
Ancillary Products		20	%		9	%
Total		100	%		100	%

At November 30, 2023, hair and skin care product’s accounts receivables from customers that accounted for more than 10% of sales transactions were from four separate customers at 30%, 29%, 10% and 10%. At May 31, 2023, hair and skin care product’s accounts receivable from one customer accounted for more than 10% of sales transactions.

The Company purchased inventories and products from five vendors totaling approximately $220,000 and six vendors totaling approximately $89,775 for the three months ended November 30, 2023 and 2022, respectively. Hair and skin care inventory product purchased from three vendors totaling approximately $297,833, (95% of the purchases at 61%, 12% and 22%) during the fiscal year ended May 31, 2023. The Company purchased inventories and products from five vendors totaling approximately $303,000 and from eight vendors totaling $216,904 for the six months ended November 30, 2023 and November 30, 2022, respectively.

Concentration of Revenue, Accounts Receivable, Product Line, and Supplier – Ear Protection and Enhancement Products

AXIL is sold direct-to-consumer, therefore, 90.6% and 96.1% of sales was direct to customers during the three months ended November 30, 2023 and November 30, 2022, respectively. There was no single customer that accounted for greater than 10% of total sales in those periods. During the six months ended November 30, 2023 and November 30, 2022, sales direct to customers accounted for 93.3% and 95.7%, respectively. No single customer that accounted for greater than 10% of total sales in those periods.

During the three months ended November 30, 2023 AXIL sales to customers outside the United States represented approximately 5.8% which consisted of 4.0% from Canada and the remaining from various countries. During the three months ended November 30, 2022 sales of AXIL product to customers outside the United States represented 4.4% which consisted of 3.5% from Canada and the remaining from various countries. During the six months ended November 30, 2023 AXIL sales to customers outside the United States represented approximately 5.1% which consisted of 4.2% from Canada and the remaining from various countries. During the six months ended November 30, 2022 sales of AXIL product to customers outside the United States represented 4.4% which consisted of 3.7% from Canada and the remaining from various countries

Manufacturing is outsourced primarily overseas via a number of third-party vendors, the largest vendor accounted for 89.4% and 91.8% of all purchases for the three months and six month ended November 30, 2023, respectively. For the fiscal year ended May 31, 2023, the two largest vendors accounted for 82% and 10% of all purchases.

During the three months ended November 30, 2023, AXIL sale of ear buds for PSAP (personal sound amplification product) and hearing protection by product line which each represented over 10% of sales consisted approximately 54.3% ($7.3M) from Ghost Stryke, 14.4% ($1.9M) from Trackr earmuffs and 30.2% ($4.0M) of sales of other Bluetooth and ear buds. During the three months ended November 30, 2022, AXIL sale of ear buds and hearing protection by product line which represented over 10% of sales was 91.3% from Ghost Stryke model GS-X ($10.2M).

During the six months ended November 30, 2023, AXIL sale of ear buds for PSAP (personal sound amplification product) and hearing protection by product line which each represented over 10% of sales consisted approximately 55.0% ($12.4M) from Ghost Stryke, 13.1% ($3.0M) from Trackr earmuffs and 30.9% ($7.0M) of sales of other Bluetooth and ear buds. During the six months ended November 30, 2022, AXIL sale of ear buds and hearing protection by product line which represented over 10% of sales was 91.1% from Ghost Stryke model GS-X ($15.6M).

During the six months ended November 30, 2023 sales by hearing enhancement and protection products comprised of the following:

Schedule of sales by product comprised
	For the six months ended November 30,
Ear Protection & Enhancement Products	2023			2022
Ghost Stryke		55.0	%		91.3	%
Trackr Earmuffs		13.1	%		7.7	%
Other Bluetooth and ear buds		31.9	%		0.9	%
Accessories, other		0.0	%		0.1	%
Total		100.0	%		100.0	%